NBR reduces VAT on biscuits, cakes by half

The National Board of Revenue (NBR) has reduced the Value Added Tax (VAT) on biscuits and cakes by half.

A notification to this effect was issued on Wednesday.

Under the new regulation, the VAT on these products has been slashed from 15% to 7.5%.

The notification specifies that the reduced VAT will apply to machine-made biscuits, as well as hand-made biscuits and cakes with a price exceeding Tk200 per kilogram and Tk300 per kilogram, respectively.

Earlier, in January, the government had increased VAT and supplementary duties on over a hundred goods and services, including bakery products, biscuits, and cakes.

The VAT on these items was raised from 5% to 15%.

The imposition of VAT on biscuits, among other products, faced criticism, and there were calls from the business community to reduce the tax.

Following two rounds of meetings between business leaders and the NBR, assurances were given that the additional VAT on biscuits would be lowered.

On 6 February, the Bangladesh Biscuit and Bread Association met with the NBR for the second time, requesting the withdrawal of the newly imposed VAT and duties on processed food products.

Business owners expressed concerns that imposing higher taxes on processed food would directly affect low-income people, marginal farmers, and working-class individuals.

They argued that with higher taxes, it would be impossible to produce goods priced at Tk 5 and Tk 10, which are commonly purchased by the lower-middle class, middle class, and working-class citizens.

They also said that 80% of the products in this sector are priced under Tk 20, catering to these demographic groups.